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Successful closings by private equity funds of funds globally have fallen to their lowest level in six years, with industry figures saying the model needs to become “more focused” if it is to regain investor confidence.

In the first half, 29 funds of funds raised an aggregate of $6bn globally, compared with last year when 31 funds raised $6bn, according to data provider Preqin. These figures are a big drop from the $18bn raised during H1 2009 and $20bn in H1 2008.

According to Mark Calnan, head of private equity at consultancy Towers Watson, clients are increasingly seeking to “avoid the fund of funds fee layer” when looking to build a private equity portfolio.

Calnan added: “There are a couple of reasons behind this, often the fund of funds model is very expensive and potentially overly diversified which in many cases has led to underwhelming net of fees returns.”

Funds of funds are also facing increasing competition for investment from other types of manager such as secondaries - who buy investor commitments - according to Mathieu Drean, a partner at placement agent Triago. Drean said: “Secondary funds are increasingly forming part of LPs portfolios, in many cases at the expense of funds-of-funds as they can produce distributions much sooner and more regularly.”

The need for change is slowly being endorsed by fund of fund managers, according to Yvonne Stillhart, a senior partner at fund of funds Akina Partners. Stillhart said: “I wouldn’t say the fund of funds model is no longer in demand but it needs to adapt its role from a one size fits all to a more focused asset manager within the private equity space.

“From our own experience we have several large US endowments invested with us because they feel we are better placed to cover certain markets from a time and value perspective.”

Altius new funds of funds vehicle will focus predominately on providing capital to fund managers with expertise in managing energy infrastructure in the US, according to two people familiar with the situation. The firm is understood to be confident of raising the money given the current investor sentiment for niche strategies and expects to reach close on the vehicle during H2 2012.

There are currently 147 funds of funds that are fundraising globally, seeking an aggregate $47bn. Funds on the road include Access Capital Partners which has a $500m hard cap for its fifth growth buyout fund vehicle, according to a spokesperson for the firm.